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CRISIL launches India’s first AIF benchmark indices

by BQ News Bureau
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CRISIL Research, India’s largest independent and integrated research house, announced the launch of benchmark indices for the domestic alternative investment fund (AIF) industry.

The indices cover all three AIF categories – I, II and III – and provide investors with a metric to compare the performance of a scheme with the peer set.

Nagarajan Narasimhan, Senior Director, CRISIL Research, said: “After a tepid start a decade ago, the Indian AIF industry has grown exponentially in recent years. A total commitment of Rs.3.85 lakh crore has been raised so far since 2012 up to June 2020. However, a common performance metric is conspicuous by its absence. The launch of AIF benchmarks by CRISIL will plug this gap, by providing a metric to compare the performance of AIFs with the category average.”

Benchmarking develops a set of standardised performance metrics to help investors identify efficient fund managers, detect risks and make sound investment decisions. It also provides a yardstick to fund managers and other stakeholders (such as the board and internal committees) to compare themselves, and course-correct, where required.

The ensuing transparency would encourage fund managers to leverage best practices and provides a level playing field to all stakeholders in the presence of only one performance differentiator: the relevant benchmark. For all category benchmarks, returns are calculated on a post-expense, pre-carry and pre-tax basis, both in rupees and US dollars.

To compare the performance of AIFs in each category, common category-level peer benchmarks have been created. As the industry matures, sub-category indices based on investment strategy and mandate will also be developed, he added.


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